30k Debt to 30k Net Worth in Two Years: My Journey into Personal Finance

 **I do want to mention first, that I am by no means a financial expert nor do I claim to be one. This is merely my own experiences. I surely have made mistakes and will continue to make mistakes. I have also lived a fairly privileged life. Not everyone is given the opportunities that I have received, and therefore my experiences can not be so easily replicated. My parents especially have been a huge help. **

There are many factors that led me to the position I am in now. Some may think it started when I got my first job as a nurse, others may say when I started university. Truthfully I am in the position I am in now because of the influences around me; parents and family, and because of lifestyle habits I obtained from when I was very young.

From a young age my parents always taught me the importance of saving and being good with my money. My parents also did not buy me whatever I wanted whenever I wanted it. In the store if there was something I wanted I (most times) had to buy it myself. As a result I grew up to really hate spending my own money. There was once a sweater I really wanted. My parents would not buy it for me and as sweaters are typically expensive (around $45) I did not spend the money either. A few months later I spotted the sweater on sale. I bought the same sweater for a cheaper price. I am the same way today. Even my favourite items: books, I do not like to buy full price and often wait for sales or try to find them at used book stores.

For university, while many take this opportunity to use it as a chance to experience new places (a really expensive experience!) I went with the advice my dentist gave me that “a degree is a degree no matter where you go, so you might as well save the money and attend school at home”. I paraphrase a bit but essentially that was the take home message. So by attending a school in Halifax I was able to take the bus in from my parents house and save money on car and rent. My parents also helped me big time by paying for my first semester and letting me stay rent free (I know not everyone has this so I am very grateful for the help I received).

 During the year I worked part time, and during the summer I landed a very good job receiving more than the minimum wage at the time (courtesy of my uncle...more privilege). Even while saving for tuition I had enough cash to travel to Laos at the end of my second year and attend the Explore program in Quebec at the end of third. My trip to Laos was fully paid for in cash while still having money to pay for school. I never would have gone if I did not have the money. The Explore program was a bursary so my only cost was the travel (which did not cost me anything as I drove up to Quebec with my mom). I do highly recommend the Explore program to Canadians (when Covid is more under control!)

 After three years of school I still had no debt, so where did the 30k come from? I had a realization in my second year that a bio degree with no purpose is just as useless as many like to say Arts degrees are. I was starting to worry. What if I don’t get into medical school? What in the world am I going to do with a biology degree!? So I decided to try to get into nursing school. That way I would still be in the medical field while having a job out of school. Yes, Halifax has a nursing program, but I unfortunately did not get in. I was only accepted to UNB and StFX. StFX was only two years so that is the one I picked. Thus, I came to discover first hand how quickly student debt can appreciate when you have to live on campus and are forced to buy into their stupid meal plans. Plus, my program ran all year round so I lost out on my really good summer job. I also did not work during this time as I wanted to focus on my grades and on actually passing nursing school (it is one hard undergrad!). My second year at X, I had calculated that based on my average grocery bill per month (I was able to figure this out from the explore program where they gave me $50 a week to spend on groceries), it was actually cheaper to stay at the more expensive Governor’s room, than to stay in a tiny dorm room with the meal plan. So I made the switch. If you want to know how I survive on $50 a week, I literally went around the grocery store with a calculator in my hand, well my phone in calculator mode. I also was occasionally gifted food from family (again, another privilege I am aware not everyone has).

And thus, that is how in two years I obtained 30k in student debt… now onto how I obtained a positive net worth. Note, that I don’t say “debt free”. I actually still maintain a balance of student debt. “That’s stupid!” You may think. But I decided to work in a rural community in Nova Scotia. As a result I can receive up to 4k a year for up to 5 years for a total of 20k. “But that’s less than your student debt!”. True, but here is how it begins to make sense…

Starting out, right off the bat, I immediately made a budget for myself. I kept track of my rent, electricity, internet, phone, emergency fund, TFSA, travel fund, etc. I rarely eat out at restaurants, I rarely buy things (remember when I said I hate spending my own money?). So after calculating my budget I was able to put lots of money on my provincial loan, I had about 10k in Provincial and 20k in Federal. I decided to get rid of the Provincial first as the Federal had the forgiveness and planned to knock myself down to only one source of debt. So, after a few months (I started working in January 2019) of putting $300-$600 biweekly on my debt, my signing bonus for choosing to work in a rural community came in. Note: not all rural communities have this! My initial thought was to place it in my TFSA. Then I realized I could pay off my provincial loan in full. So I did that. Thus, in three months my 10k provincial loan was gone. All that remained was my 20k federal loan. 

Could I be “debt free” now? The answer is yes. But that would cost me my savings and in the long run I would be paying more out of my own pocket. Why would I want to pay more of my loan out of my own pocket when the government is offering to pay it for me? Would you rather be debt free in a year and pay 16k yourself with the government paying 4k, or would you rather have the debt for 4 years and have the government pay 16k and you pay 8(ish)k. Normally I would say get rid of the debt! And that was my initial mentality going in. But with the loan forgiveness it just does not make any logical sense to pay it off quickly. I put my loan for the longest time possible to make my payments as cheap as possible. I want to pay as little as possible and the government to pay as much as possible! As a Canadian nurse I am able to do this, unfortunately not all professions have this opportunity. If you are a Canadain nurse, take advantage of this wonderful opportunity! 

Because of my small loan payments I was putting at minimum $1000 a month into my travel fund and about $400 in my TFSA. Which enabled me to travel to Costa Rica in November 2019. Something I did not expect to do until years to come! 

Now, the year 2020. It did help me obtain a positive net value quicker but as a result of none of my planned trips coming to pass. I did make it to Ottawa though! But Disney, Michigan, and Iceland were all canceled. As a result, my net value changed to positive in and around April 2020 when all my Disney money was returned to me (sad for such a joyous moment). 

Another factor that helped obtain my positive net value was my choice in purchasing a car. I had debated for a while whether to buy new, used or lease. I even went to a dealership for a toyota yaris, but once they started talking about how much it would cost it got very nauseating. I hate spending my own money and the idea of welcoming new debt by my own choice, sickened me. So, I decided on “used”. Now to find a solid vehicle. Luckily my grandfather knew someone who was very good at finding used vehicles (more privilege). I knew what I wanted: either a honda civic, toyota corolla, or mazda3 with less than 150000k on the odometer and a price less than 10k. The result of these parameters was a beautiful white 2008 Honda Civic with only 134000k on it. It was even the luxury model at the time! The price? $5400. I paid in cash. This was in October 2019, when I bought the car.

Now, the way I am talking makes it sound like “I have no life”. I am extremely introverted and I hate parties. It is not like I don’t buy anything for myself. I bought that trip to Costa Rica and to Ottawa to watch the Lord of the Rings with a live concert (I stayed in the jail hostel to make it cheaper, haha). I do not drink, I do not do drugs, I do not eat at restaurants much, I do not care for designer clothes, I really only use mascara for make-up and sometimes a cream like BB-cream. All the "extra" expenses most people have, I don’t. So what do I buy? Before I bought my car, I had bought a bike to get to work, I bought myself a PS4 for my April birthday my first year working, I bought a nintendo switch during Covid. I do buy some clothes; mostly from used clothing stores like Frenchy’s and Value Village, and I do sometimes buy the odd thing from Adidas; my favourite brand when there is a sale (I spend no more than $150), I bought myself a $150 sword from Hal-Con (I could not pass Anduril by!). So yeah, most of my “spending money” is for either travel or books and when I buy books, I try to wait for sales. Honestly, I rarely buy anything full price. I hate spending my own money! 

So, now that I have saved up some money, what do I do with it? My dad for the past few years has gotten really into personal finance. He taught me a lot but told me I needed to read up on it myself as it was important I knew what I was doing and that I did not follow his lead blindly. So I read: “The Millionaire Teacher”, “Wealthing Like Rabbits”, and “The Wealthy Barber”. I do plan to read more books in 2021 as you can never read too much!

Despite obtaining a positive net worth early in the year (2020) I did not actually throw myself into the investing world until the late summer: September 2020 to be exact. From there I joined RBC direct investing and opened a TFSA within. I put all the money I had saved in my previous TFSA into that account. To start I bulk bought an ETF: VEQT (an all equity fund diverse in Canadian, American, and International stock). As RBC charges $10 to buy VEQT each time, I had to come up with something else in the meantime. I would be constantly losing value if I paid $10 every two weeks. Following one of the plans from “Canadian Couch Potato” ,I elected to buy the TD e-series: Candian, American, and International. Every two weeks I split $500 into these three funds, buying more of which ever is doing the worst. I eventually plan to liquidate these funds to bulk buy more VEQT. You may have noticed I have no bond funds. This is because I am still in my 20’s and I have a very good pension. I don’t plan to buy bonds until my 30’s. 

In the middle of October I also opened a EQ bank account (my whole family did actually). I mean 1.5% interest is too hard to avoid especially with interest rates for other banks being so depressingly low. I transferred my travel and emergency fund to EQ and have contributed to it every pay as well. This ranges from $200-$600 per month. My goal for my emergency fund is around 10k or so, just enough to buy a new beater if my car were to break down. My travel fund really has no limit. It definitely would not be as it is now if I had gone on my planned trips this year. At least I am ready for when the vaccine makes its rounds!

Now to the fun part: calculating my net worth!

As of Dec 30, 2020…

Assets:

Investments: $17280

EQ Bank: $18700

Pension: $4950

2008 Honda Civic 4DLX black book canada: $5900

TOTAL: $51810

Liabilities:

Student loan: $14280

NET WORTH: $32550

I know not everyone would include a car, as it is more of a liability. That would still put me at $25k. Not bad for two years. Like I have repeated throughout, this is my experience from a place of privilege. At the same time could I have spent all of my money as it came in and have a negative net worth presently… yes, that is not an impossible scenario and an all too common one in today's youth (the Canadian education system does us all dirty when it comes to education on finances). Despite my privilege I still had to work hard to get to where I am. I do not mean to devalue my hard work. I just think it is important to acknowledge that I do indeed come from a more privileged family than the average Canadian. Regardless of this, I still had to make smart financial decisions along the way,  I had to work hard in school, I had to work part time jobs, I had to pay my own tuition (with the exception of first semester), and I had to read up on personal finance. But most importantly; I would not be where I am today without my parents. Their knowledge and experiences have been monumental in my success. I have even learned from their mistakes (thank you mom and dad for making mistakes that I can learn from so I do not make them myself!) I know they say it is important to learn from your mistakes. I am sure I have already made some in my personal finance journey, but at the same time it is so much more beneficial to learn from others mistakes! So if you can learn from mine, good on you!